The Bluefield AMS materials management assessment process provides maintenance and supply teams with a road map for materials management success.
Consistently we see that the maintenance department and supply chain do not effectively work together to solve their problems.
The ERP system isn’t working the way it should, key improvement initiatives fail, people feel as though information is being ignored, they don’t understand each other’s constraints, and managers find it difficult to bridge the gap that lies between them.If your operation experiences downtime due to waiting on parts, this insight into our key learnings may interest you.
There are two key problems that bring about materials management performance issues: poor master data, and a lack of inventory control.
Master data is the system’s foundation when it comes to supply of materials used for maintenance, repairs and operations (MRO).
Maintenance want the right part at the right price, at the right time, the right quantity, at the right place and right quality.
This is difficult to achieve without knowing exactly what each of these expectations means in practice. Put simply, defining this in the system is what master data does, and inventory control is using the master data to deliver the required service levels.
Master data is not something that can be set and forgotten about. MRO inventory control must constantly adapt to changes on both the demand and supply side to ensure supply performs an effective and efficient service.
Why do these problems exist?
Problems with master data often stem from legacy issues of substandard processes and poor information, especially at establishment of inventory records at operational readiness.
It continues if there are poor standards of asset information and change management, poor definition and control of spares against asset strategies including lifecycle usage, and poor awareness of asset criticality and risk.
When MRO requirements are not well defined, inventory analysis and control is much more difficult, and service levels will deteriorate.
Inventory control requires knowing what parts are where, and when they will be delivered. It also involves managing non-conformances, warranty, returns, rotables and repairables.
How does this impact the business?
Specific problems with master data can remain hidden and are difficult to find when asset strategies are out of date, maintenance plans are not accurate, component forecasts and lifecycles are not well defined, and maintenance planning and execution is more reactive than proactive, leading to more breakdowns.
People in maintenance and the supply chain become less efficient and due to frustration, they may begin to consciously avoid using the correct process as they look for workarounds.
The result will be increased inventory, more non-inventory purchasing of goods, increased stock-outs, increased freight costs, increased purchasing cost, increase wastage and increased equipment downtime.
Who is responsible?
Maintenance is responsible for creating a demand signal whenever materials are required. Supply is responsible for meeting the demand. Both maintenance and supply therefore share responsibility for materials management.
- Create a culture of discipline and understanding when it comes to cataloguing and material master data.
- If current master data standards are poor, maintenance must review what parts belong to what assets and efforts must be made to improve master data.
- Treat spares like assets. When spares are no longer needed or are not performing correctly, do something about it.
- There must be discipline in using the inventory system as it is intended.
- Aim for 100% accuracy of planned maintenance parts consumption by having the correct parts for the correct job.
- Ensure assets have accurate component forecasts and get accurate tasks and materials for every job.
- Reduce breakdowns by getting on top of the quality of your scheduled maintenance.
- Ensure MRO spares in your warehouse are labelled correctly.
- Review the returns process to ensure that un-used, incorrectly supplied, damaged or parts for repair are controlled and managed.
- Effectively bridge the gap between maintenance and the supply chain.
- Measure and communicate expectations and performance. It goes both ways. Maintenance must accept their 50%.
Recognise that maintenance and supply must work together. Supply chain managers in mining must ensure the maintenance team understands the end to end supply chain process.
Clearly define each other’s requirements. Form working agreements. Communicate openly, honestly and frequently. Hold each other mutually accountable.
For asset managers, understand that your maintenance team is responsible for sending demand signals to supply. The clearer the signal, the more chance of supply correctly servicing maintenance requirements.
Bluefield’s Materials Management Process Review
If it can’t be measured, it can’t be managed. Maintenance organisations may find themselves focussing on management of work, reliability, or technical training. Supply chain organisations may find themselves focussing on contracts, purchasing, logistics and warehousing. But both groups may still come up short in achieving their common materials management objectives.
One way to identify any gaps in this process is to conduct a review against the key process areas. Bluefield has a materials management assessment tool based on our Materials Management Process Model.
Our materials management assessment looks at both the maintenance and supply chain work groups, and how effectively and efficiently the supporting procedures, processes, tools and functions work towards achieving common departmental, organisational and business objectives.
We recently conducted a review for a client and identified almost 50 improvement opportunities across the six areas. These were not just improvements for their own sake; we identified millions in potential savings through minimising parts lost in the ordering or returns processes, duplicate items catalogued under two different stock numbers, and parts degrading in storage. Likewise, stock outs and delivery delays were increasing maintenance downtime unnecessarily.
By making changes to your processes, tools and culture, these improvements can be sustained in the long term.
Please contact us if you would like to understand in more detail how to get more from assets.
By James Owen